Cargill takes control of gum venture in China

The US agri-giant has been building up its food ingredients offering through acquisitions in recent years, and with the purchase of Degussa's food ingredients division earlier this year, it has expanded its hydrocolloid range. With 100 per cent ownership of Zibo Cargill Huanghelong Bioengineering (ZCHB), which was set up in April 2003 with the regional alcohol producer Shandong Huanghelong Group, the company is set to become a significant player in the xanthan business. Xanthan gum is used in a wide range of food and beverage applications to add texture and as a stabilizer. The growth of food industries in emerging markets like China, India, southeast Asia, Eastern Europe and South America has boosted worldwide demand for the ingredient. Cargill's Chinese business produces more than 5,000 metric tons, although it is still some way behind the leader CPKelco, which recently announced it would expand its Chinese production to some 12,000 tons. However Cargill says it can now transfer some state-of-the-art knowledge from its French facility in Baupte to the Zibo plant, improving on its product. "ZCHB is already one of the most technologically advanced xanthan gum plants in China,"​ said Cargill corporate vice president Robert Parmelee, head of the company's Food System Design businesses. "Our xanthan gum range will now be complete, from industrial to specialty food and cosmetic grades including clear, granulated, dispersible and allergen-free."​ Several international firms have entered China's xanthan gum market in recent years, attracted by the production efficiencies and rising domestic demand for the ingredient. Demand for xanthan gum in China is growing by around 5-10 per cent as the processed food industry sees rapid growth. Last year it consumed about 6,000 tons of the hydrocolloid. Aside from Cargill and CP Kelco, Danisco also has a joint venture with one of the largest xanthan gum suppliers in China, the Henan Tianguan group. CPKelco bought Gold Millet, the second largest producer of xanthan gum in China, at the end of last year. At the time, the US firm said the acquisition would boost production capacity for the product by about 15-20 per cent. Cargill started trade with China soon after President Nixon's visit in 1972 and its annual trade with the country now exceeds US$3 billion. Most of this is from commodity products but it has also bought some small food ingredient operations in recent years. The xanthan gum company will be integrated into Cargill's Texturing Solutions business.